1. Field of the Invention
The present application generally relates to the optimization of marketing mix from the point of view of brand management and, more particularly, to the formulation of the sequential marketing mix optimization with respect to brand equity management as a Markov Decision Process.
2. Background Description
There is an increasing interest in the use of predictive data mining techniques to optimize the total effectiveness of marketing mix from the point of view of brand management. Unlike most of the existing targeted marketing scenarios, the current problem focuses on optimizing a broad spectrum of marketing activities including mass marketing. As a result, the transaction data to be used for analysis may not be tied to individual customers, as is the case for the invention disclosed and claimed in U.S. patent application Ser. No. 10/198,102. Therefore, methods are needed that can optimize marketing mix given transaction data, not linked to customers.
Another aspect that is lacking in existing approaches for marketing mix optimization/modeling is the notion of optimizing sequences of marketing mix decisions over the lifetime of a brand so as to best manage the various stages of a brand's lifetime. Existing approaches mostly focus on the issue of accurate modeling of the effect of marketing mix given highly noisy data. While this is an important technical challenge that need be addressed, it alone does not address the problem of optimizing sequences of marketing mix decisions over time.